Apple’s iCloud agreement with major US labels worth $100M+ in upfront cash payments
The New York Post is reporting that Apple will pay more than $100M in up-front payments to the four major music labels (Sony, Universal, EMI and Warner) in a licensing deal for their new iCloud service. Apple has confirmed the announcement of their iCloud service will be made at their Worldwide Developer’s Conference on June 6.
The labels get between $25-50M each, with the variations coming from how many tracks from each label users are storing with Apple’s service. Apple has more than $60B in cash reserves, so a $100M+ investment for a service that could conceivably sell more iPads and iPhones seems to be a no-brainer.
The upfront fees were a major issue stalling the Google negotiations. Now that Apple has set a precedent, Google could realistically have a similar licensing agreement implemented by September.
Apple is expected to implement the cloud service for free, with plans to change to paid subscriptions in the future; seemingly once users are sufficiently hooked. The Cupertino tech giant’s cut of future subscription fees will be 18 percent. 12 percent will go to publishers and the remainder given to the labels. The LA Times also reports that Apple will also subsidize the cost of implementing the service with advertising.